Economists have developed models of risk aversion using the concept of
a. utility and the associated assumption of diminishing marginal utility.
b. utility and the associated assumption of increasing marginal utility.
c. income and the associated assumption of diminishing marginal wealth.
d. income and the associated assumption of increasing marginal wealth.
a
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Alice Hanson Jones (1980) finds that private nonhuman physical wealth in New England in 1774 was 36.4 pounds sterling per capita. Thus, assuming a capital output ratio of 3:1, Jones estimates that per capita income in New England in 1774 equaled:
a. about 9 pounds sterling. b. about 12 pounds sterling. c. about 45 pounds sterling. d. about 145 pounds sterling.
When investors follow a "herd instinct," they:
A. invest in something as a group, making it appear more valuable than it is. B. make decisions as a group, inflating the prices of goods somewhat arbitrarily. C. invest in something simply because everyone else is doing it. D. only makes decisions as a group, making it hard to determine individual behavior.
Demand-pull inflation has its most extreme effect on a nation's price level in the:
a. Keynesian range. b. Twilight zone. c. Intermediate range. d. Classical range. e. Somewhere over the rainbow.
If a monopolist produces to a point at which marginal revenue is less than marginal cost then
A. profits will always be negative. B. the incremental cost of producing the last unit is less than the incremental revenue. C. profits are being maximized. D. the incremental cost of producing the last unit exceeds the incremental revenue.